Customer Satisfaction in the Services Sector through Marketing and Operations - Term Paper Example

Customer satisfaction in the services sector through marketing and operations Abstract This paper is designed on the basis of marketing theories for services and is centered on examination of the relationship between customer satisfaction and service quality. The two aspects determine customer’s re-patronage intentions. Previous studies on the topic show that quality of service and customer satisfaction has a direct positive influence on customer’s re-patronage intentions. Similarly, satisfaction is depicted as a greater predictor of customer re-patronage intentions in comparison with quality of service. This propositions form basis of discussion in this paper in regard to possible limitations, interpretations, and implications marketing professionals encounter in marketing services (Fena & Lian n.d.). Table of Contents Abstract 1 Introduction 3 Background 3 Properties of the Service Sector 5 Method 6 Findings 6 Fast Food Service 6 Credit Card service 7 Consultancy service 7 Discussion 8 Dimensions of Service Quality 9 ‘GAPS’ model of service quality 10 Pyramid Model. 10 Evaluation of Service Quality 11 Conclusion 12 Bibliography 13 Introduction In recent times maturity in various industry sectors has been witnessed. This has raised the level of competition leading to high quality service differentiation as a crucial weapon for business survival. In this paper, customer satisfaction will be examined through personal experiences in restaurant, consultancy, airline, and technology (credit card) sectors. Studying service quality and customer satisfaction is of interest since both antecedents serve as means of understanding customer behaviour changes and intentions. This is in recognition that customer satisfaction alone has no impact on customer long run value. Secondly, quality and satisfaction have close linkage with customer retention and gains in market share. However, there exists an overwhelming debate that wining new customers is more expensive than retaining existing ones (Hormozi & Giles, 2004 cited in Fena & Lian n.d.). Athanassopoulos, Gounaris and Stathakopoulos’s (2001 cited in Fena & Lian n.d ) supports this positing by arguing that costs incurred to replace customers are far much grater and takes ages before profit is realized, these costs include, promotion, advertising and sales expenses. Word of mouth in marketing plays crucial role in increasing customer retention, decreasing sensitivity to price as well as future transactions costs. This improves business environment resulting to better performance Ryals 2003 cited in Fena & Lian n.d.). Background Definition of service quality is abundantly available. However, various marketing researchers have defined service quality in a number of ways. For instance, according to Bitner, Booms and Mohr (1994, p. 97) service quality can be defined as the consumer’s overall impression of the relative superiority or inferiority of the service company and the services offered. On the other hand quality of service is viewed as a form of attitude which represents long-term evaluation (Taylor & Cronin, 1994). Service quality can also be defined as a function of the differences existing between performance and expectation of customers along quality dimensions (Parasuraman, et al.1985, p. 48). The above definition happens to be in consistent with Roest and Pieters’ (1997) who described service quality as a cognitive and relativistic discrepancy between performances and experience-based norms concerning benefits gained from a service. Most researchers on this topic have conceptualized customer satisfaction based on personal views or feeling of disappointment of enjoyment as a result of comparing perceived service performance or outcome and customers expectations (Brady & Robertson, 2001; Lovelock, Patterson & Walker, 2001). In General, customer expectations emanates from two concepts. First is how customers conceptualize satisfaction, based on cumulative satisfaction. Second is the concept of transaction-specific satisfaction (Suh, 2000; Yi & La, 2004). The later form is where a customer is able to evaluate his or her reactions or experience to a given service (Boshoff & Gray, 2004). While the overall customer evaluation on experiences of consuming a particular service up to date is referred to as cumulative satisfaction (Fena & Lian n.d.). As a consequence of customer satisfaction, Customer relations managers generate subjective judgements feelings and intentions about customer’s future behaviour. This antecedent is therefore a dependent variable in most satisfaction models conducted in service research studies (Soderlund & Ohman, 2003). According to Rust, Zahorik and Keiningham (1995), customer’s intentions to repurchase and the real patterns in repurchase do not necessarily have to be similar. This paper is in agreement with above arguments on customers’ intentions to repurchase which again serves as a measurable service outcome. In contrast, Soderlund and Ohman (2003) considers customers repurchase intentions as intention-expectations. This manifestation led Hellier et al. (2003, p. 1764) to define customers’ repurchase intention as and individual’s choice based on personal judgements towards a designated service by repurchasing same service from that company as determined by his or her current accounts of likely circumstances and situation (Fena & Lian n.d.). Properties of the Service Sector Marketing researchers identified three broad categories of service properties. These include, search properties, experience properties, and credence properties. Experience is a characteristic feature which cannot be evaluated before purchase. This can only be evaluated by a customer after experiencing the service. Although markers try to describe the properties during advertisement, customers can only realize those properties after experiencing or feeling the benefits of the service. Sectors in this category include barber shops, architects, banks, hotels, home builders, Internet Service Providers, retail stores, real estate agencies, and zoos (Parasuraman 2002). The second service property is the credence of service. This property is impossible to evaluated easily even after customer’s experience without getting information from a credible source. This is because the customer has no expertise or knowledge to accurately rate the service. The third property is search property. In this case, customers are able to easily evaluate and compare the purchasing of the product. The search properties facilitate customers in searching for the best product to buy and make objective product performance measures such as capacity, speed, or energy requirements (Parasuraman 2002). Method This study will investigate personal experiences to three service industries, 1. Credit card, 2. Restaurant, and 3.Cunsulatncy services. A cross-sectional investigation will take the form of a self-administered questionnaire on multiple service marketing and operations items. The items will be utilized in measuring quality of service by borrowing from a Conceptual Model of Service Quality (Parasuraman et al.1985). While the main constructs will be tested based on five-point Likert Scale. The main aim is to find solutions on how service organizations can improve customer service and foster excellence in organizations (Parasuraman 2002). Findings Fast Food Service The restaurant services sector is widely regarded as a lower credence service sector. Thus it was difficult to proof patronage to a specific restaurant without personal experience. The second obstacle witnessed relates to dynamism in this industry. This arises from in different experiences on service quality on each re-visit. Therefore the main repatronage intentions to a specific restaurant rely most on relationships between service quality, repatronage intentions, and customer satisfaction. From observation frontline staff in this sector requires training pertaining sensitivity and responsiveness to customer needs. This satisfies customer expectation of effectiveness and efficiency. In addition, favourable ambience and cleanliness coupled with appropriate lighting and music improves the restaurant atmosphere. Drawing a marketing plan was also another experience that would be necessary for the restaurant to influence customer’s intention to re-visit and later become future patrons (Parasuraman 2002). Credit Card service The experience with credit card was unique, most adverts emphasize on convenience rather than credit or payment. This is mostly tempting due to unnecessary debt incurred without care. In this case, convenience is a search property, however, limitations of their service had a significant bearing on the scope of credit card acceptance to real businesses patronized by the customer. By encountering and realizing that the credit card cannot be accepted by un-patronized businesses, then it becomes an experience property. Service marketers in this sector often lure customers by offering bonuses on sign-ups, frequent gifts and flier miles. Likewise, reduced charges were used as introductory bait, but after six months the rates became revised (Parasuraman 2002). Consultancy service A consultancy service by large offers advice, the client business situation becomes the input for processing through expertise analysis the ultimately recommendations becomes the product. Experience of ‘expertise’ is objective but cannot be a search property, instead it could be an experience property. For instance when a client experiences good work from one consultancy firm, therefore, sometimes consultancy firms offer free initial consultation or referrals by other clients who earlier experienced their expertise(Parasuraman 2002). Based on experiences in the four categories of services, it was discovered that service and convenience factors have the highest expectations. This could be due to busy urban life styles. In contrast, most of the organizations image scored least in terms of expectations. While perceived performance was rated according to quality of the service, this factor was greatly influenced by atmospheric as well as convenience factors (Parasuraman 2002). Discussion Based on the above literature and individual experiences, the bottom line for any firm in the service sector is to launch marketing tactics and strategies. This is dictated by the current competitive and fast-paced market. Therefore firms in the services sector must strive to steer company growth, satisfy its customers, improve service quality and retention of existing customers as the major global competitive issues affecting all firms (see Table 1). It has been noted that most companies are currently more concerned with evaluating, studying and increasing market share through marketing strategies geared towards improvement of customer retention and increasing market share. In fact there is greater advocacy on adopting customer retention as a key performance indicator (Fena & Lian n.d.). Table 1.Differences between Service Quality and Customer Satisfaction Customer Satisfaction Service Quality It is possible for customer satisfaction to result form any dimension, whether it is quality related or not The underlying dimensions about quality judgements are quite specific. Judgements about Customer satisfaction can be formed by a variety of non-quality aspects, like equity, needs, and perceptions of fairness. Quality service expectations are based on perceptions or ideals of excellence. conceptual antecedents about customer satisfaction are believed to be more There are fewer conceptual antecedents about Service quality. Judgements about customer Satisfaction require experience with the provider or service. Experience is not required in quality perceptions of provider or service. Source: Adapted from various sources cited in (Fena & Lian n.d.). Dimensions of Service Quality Service sector is evaluated based on dimensions that help to improve service quality in order to meet customers’ expectations. This include; Understanding/Knowing the Customer, communication, Access, competence, credibility, Reliability, courtesy, Responsiveness, Tangibles, and Security. For better results in an organization these dimensions are corresponded to service evaluation dimensions or SERQUAL such as tangibles, responsiveness, reliability, empathy and assurance. In this way it is possible to resolve service organization. For example 1. Interaction of service quality dimension with tangibles helps o improve physical appearance of equipment, communication, personnel, and materials.2. Responsiveness boosts willingness to help customers and offer faster service.4. Assurance helps in enhancing courtesy and knowledge of employees and their ability to inspire confidence and trust.5.Empathy results to improve individualized, caring, and attention to services provided by the firm provides its customers (Parasuraman 2002). ‘GAPS’ model of service quality According to Gaps model, Service organization is essential to meet Customers expectations and customer’s perceptions. In this model, the following gaps have been identified, 1 market information gap, service standards gap, service performance gap, internal communication gap, and service quality gap. Therefore customers satisfaction can be met by taking corrective actions and continued monitoring of customers' expectations (see Figure 1) (Parasuraman 2002). Pyramid Model. In today’s advanced technologies there is a greater influence of technology on Marketing operations and serving customers. According to the Pyramid Model, technology has assumed central role in organization management operations. Therefore, through technology, there is a pyramidal interaction between the Company, employees and customers. Therefore, three facets of marketing take place as follows, 1 Interactive marketing which connects employees with customers, External marketing, where the company directly links to customers bridged by e-service, and internal marketing which is facilitate via LAN and WAN network solutions thus linking employees to the company e- service quality or e-SQ is the extent to which a Website facilitates efficient and effective shopping, purchasing and delivery of products and services. An Important Implication of the Pyramid Model An organization’s ability to use technology effectively in marketing to and serving customers critically depends on the technology readiness of its customers and employees (Parasuraman 2002). Evaluation of Service Quality There are two techniques for measuring service quality, these are 1. Measure of Service Adequacy: represented mathematically as (MSA) = Perceived Service - Adequate Service, and 2. Measure of Service Superiority: represented mathematically as (MSS) = Perceived Service - Desired Service. Furthermore, MSA and MSS have two approaches in quality service evaluation based on; Two-Column Format Questionnaire, which measures MSA and MSS Directly. While, Three-Column Format Questionnaire measures the Difference-score of MSA and MSS (see Table 2) (Parasuraman 2002). Table 2 Mean Service Quality Scores Conclusion Understanding of customers’ service expectations and how well those expectations are being met systematically works to remove potential organizational barriers that result to poor customer service. This paper justifies that capitalization and recognition of the increasing role of technology customers in service. However, the technologies must be cognizant of employees and customers readiness to embrace the technology-based services. Likewise, e-service quality is recognized. The paramount question in improving the service sector is through a continuous process of monitoring employees and customers reactions to and experiences with company’s services (Parasuraman 2002). Bibliography Bitner, M. J., Booms, B. H & Mohr, L. A. 1994. ‘Critical Service Encounters: The Employee,’ Viewpoint. Journal of Marketing, 58(4): 95–106. Boshoff, C. & Gray, B. 2004. ‘The Relationships between Service Quality, Customer Satisfaction and Buying Intentions in the Private Hospital Industry. South African,’ Journal of Business Management, 35(4): 27–37. Brady, M. K & Robertson, C. J. 2001. ‘Searching for a consensus on the antecedent role of service quality and satisfaction: An exploratory cross-national study,’ Journal of Business Research, 51(1):53–60. Fena, Y. S & Lian, K.M. n.d. ‘Service quality and customer satisfaction: Antecedents of customer’s re-patronage Intentions,’ Sunway Academic Journal, 4:60-69. 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